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Northern Trust Asset Management launches Life Engineered target date solution

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Northern Trust Asset Management has launched Life EngineeredFunds, a new suite of target date retirement funds. 

The are designed to help defined contribution plan sponsors by providing participants with a comprehensive solution that takes the guesswork out of investing and builds a more secure retirement. Using Northern Trust’s asset allocation framework, the funds combine the firm’s factor-based Engineered Equity strategies and PIMCO’s active fixed income and inflation-sensitive strategies.

“Northern Trust has re-engineered the target date fund,” says Stephen N Potter, President of Northern Trust Asset Management. “Life Engineered Funds leverage our unique factor-based investment approach – called Engineered Equity – and our demonstrated expertise in asset allocation. This new series reflects our continued commitment to the retirement marketplace by providing an efficient and effective solution for DC participants to build for their life in retirement.

“Our offering also incorporates the insight and expertise of PIMCO, a leading global investment management firm, for the fixed income and inflation component. The result is two global market leaders coming together to specifically help plan participants live well, for life.”

“We look forward to working with Northern Trust and share a common point of view on the primary objective for Target Date funds,” says Rick Fulford, Head of Retirement at PIMCO. “We believe the next generation target date funds, like Life Engineered, should seek to provide sufficient, reliable income.”

Life Engineered Funds are available to defined contribution retirement plan sponsors in 12 collective trust funds, designed for participants who are retired or are planning to retire between now and 2060. Each fund includes a combination of three distinct strategies: growth, income and inflation sensitive.

“We have seen considerable adoption of our Engineered Equity factor-based strategies by global institutional investors over the past year, due to an increased focus on managing volatility and taking compensated risks,” says Northern Trust Chief Investment Officer Bob Browne. “Academic studies, including our own, have identified factors in the equity markets that have been proven to outperform over time. Strategically combining exposures to those factors provides portfolios the right volatility at the right time, over a certain time horizon.”

“The result is enhanced efficiency, controlled risk, more reliable return and better investor outcomes,” Browne continued. “Utilising our proprietary glidepath, Life Engineered portfolios are designed to deliver the right blend of growth, income and risk at the right time depending on where you are in your retirement journey. This investment solution was developed to help grow retirement assets and protect a portfolio’s purchasing power, ultimately to generate more retirement income.”

Sabrina Bailey, Global Head of Defined Contribution at Northern Trust Asset Management, says that as DC plans become the primary retirement savings vehicle for most Americans, these new target date funds address challenges facing retirement plan sponsors and their participants.

“Studies show the average investor consistently underperforms the market by a significant amount, and more than half of households are at risk for living below their standards in retirement,” says Bailey. “Participants have challenges – knowledge, interest and time – that can prevent them from making the best financial choices. When it comes to investing in their retirement plans, they often do not know which funds to choose, how often to rebalance, and how much risk they should be taking.”

Bailey adds: “Our Path Forward research shows that more than 70 percent of DC plan participants turn to their employers for advice and guidance. As a former institutional retirement consultant, I also understand the increased fiduciary risk facing plan sponsors. Our Life Engineered Funds give plan sponsors a solution that takes the guesswork out of retirement investing for their participants. By focusing on taking the right risk at the right time, we believe investors can increase the probability of successful outcomes.”

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